Having financial conversations with your adult children can benefit both you and them. When it comes to your will and estate plan, talking about what is in your plan can help ensure that your wishes are carried out effectively and with minimal confusion. Surprises in an estate plan can often cause rifts, hurt feelings and fighting among remaining family members.

Being open about your finances and estate plan can help children and other heirs understand your financial situation and make informed plans for their own future.If you’re incapacitated they may be put in the position of paying for your bills or managing your accounts. If they are completely unfamiliar with your finances, this will be much more difficult. This can be very stressful at a time when they are also dealing with the loss, or potential loss, of their parent or loved one. They also may not handle your affairs in the way you’d like due to the unfamiliarity or lack of understanding they have about your situation. 

Sharing financial information can also be an opportunity to educate your children about money management, investments, and estate planning. You have the opportunity to explain why you invest your money a certain way and what the benefits of that have been for you. You can share information you wish you’d known when you were first starting your career, buying a house, or saving for retirement.

What Information You Should Share

  • Who the executor of your will is
  • Contact information for all financial and estate planning professionals you work with (financial advisors, accountants, attorneys, etc.)
    • Location of important financial, insurance and estate planning documents:
      • Life insurance policies
      • Will, Power of Attorney, Trust documents
      • Medical directive
      • Health insurance information
      • Savings and checking accounts
      • Retirement accounts, pensions, other investments
      • Outstanding debts and liabilities
      • Passwords, keys, access codes
  • Location of property you own beyond your primary residence:
    • Investment property
    • Safe deposit box
    • Storage units
    • Timeshares
    • RVs, boats, etc.
  • Final wishes regarding funeral and burial

Conversations about money can be difficult. A recent study by Capital Group found that people are more comfortable talking about marriage problems, mental illness, drug addiction, race, sex, politics and religion than they are about money. 

Tips for a Smooth Conversation

  • Choose the right time and place where everyone is comfortable, relaxed and unlikely to be interrupted
  • Start slow, not everything has to be shared in one sitting
  • Start with a broad overview of your plan and the location of important documents, then work your way down to more specific topics
  • Explain why you feel this information is important to share
  • Give your children the opportunity to ask questions
  • Don’t get defensive if they question why certain things are the way the are, this is your opportunity to explain and foster an open dialogue
  • Explain your intentions and reasoning behind certain decisions that might be seen as controversial

Ultimately there may still be some things you choose to keep private either until your kids are older or until after you’re gone. Depending on the age of your children, and your family dynamics, not all decisions or information has to be shared. At the minimum, you should inform the person or people you’ve named as executor, trustee, power of attorney, etc. You should confirm that they agree to and understand the responsibilities of their position. If you’re unsure about how much or what is appropriate to share given your specific situation, ask your financial professional. They might have some recommendations based on their knowledge of you, your family, and your situation.

By: Alicia Vande Ven

You should always consult a financial, tax, or legal professional familiar about your unique circumstances before making any financial decisions. This material is intended for educational purposes only. Nothing in this material constitutes a solicitation for the sale or purchase of any securities. Any mentioned rates of return are historical or hypothetical in nature and are not a guarantee of future returns. Past performance does not guarantee future performance. Future returns may be lower or higher. Investments involve risk. Investment values will fluctuate with market conditions, and security positions, when sold, may be worth less or more than their original cost.